Arizona is one of the country’s best states when it comes to tax credits for donating to charitable institutions. As a taxpayer in Arizona, you have a unique opportunity to direct your tax money to charities you support and believe in. Making a donation upfront will get you back every dollar in the form of a tax credit as long as such donation is within the prescribed limits.
What is a tax credit?
A tax credit is an amount of money that taxpayers are allowed to subtract from taxes owed to the government -dollar for dollar. They reduce the actual amount of tax owed, hence, more favorable to the taxpayer. Certain types of tax credits are granted to individuals or businesses according to locations, classifications, or industries.
What is a charitable tax credit?
According to the Arizona Department of Revenue, these are tax credits that taxpayers can avail of if they make contributions to charitable organizations – Qualifying Charitable Organizations (QCO) or donations to Qualifying Foster Care Charitable Organizations (QFCO). Individuals making cash donations to these charities may claim these tax credits on their Arizona Personal Income Tax returns.
Contributions qualified for tax credits made on or before the 15th day of the fourth month following the close of the taxable year may be applied to either the current or the preceding taxable year and are considered to have been made on the last day of that taxable year.
In 2018, the Arizona Department of Revenue has assigned a unique five (5) digit code number to identify each Qualifying Charitable Organization and Qualifying Foster Care Charitable Organization for Arizona tax credit purposes on Form 321 and Form 352, respectively.
Credit for Contributions to Qualifying Charitable Organizations
Contributions to Qualifying Charitable Organizations that provide immediate basic needs to residents of Arizona can be claimed as an individual income tax credit using Form 321. These include those who receive temporary assistance for needy families (TANF) benefits, are low-income residents of Arizona, or are individuals who have a chronic illness or physical disability. The maximum credit allowed is $800 for married and filing jointly, while $400 can be availed by those who are either single, heads of household, or married but filing separately.
Credit for Contributions to Qualifying Foster Care Charitable Organizations
This is for contributions to Qualifying Foster Care Charitable Organizations that aside from providing immediate basic needs to residents of Arizona who receive temporary assistance for needy families (TANF), are low-income residents of Arizona, or are individuals who have a chronic illness or physical disability, also provide immediate basic needs to at least 200 qualifying individuals in the foster care system. The maximum credit allowed is $1,000 for married and filing jointly while $500 for single, heads of household, or married and filing separately.
You can also avail of a tax credit when you donate to the Arizona Military Family Relief Fund, which provides financial assistance for active-duty service members, pre- and post-9/11 veterans and their families by using Form 340. Unused tax credits for this Relief Fund can be applied to future tax years, but not beyond five consecutive years.
With Arizona Tax Credit, your dollar will surely go a long way.